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  CSPAN    Capital News Today    News/Business. News.  

    February 13, 2013
    11:00 - 2:00am EST  

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years. >> okay, great. >> ad mail, direct mail, the most direct way to get to your eyes better than tv, radio, anything educational. that's stable. it's moving up with the economy. >> okay. >> first class mail, you got two things going on. commercial first class, bills and statements sent. >> right. >> pretty stable. >> okay. >> first class bill payments drop at a rate -- >> just individual internet, paypal, all of that? >> people pay bills on line. you can't fight that. it's free. >> i understand. >> what's happening, put it in perspective, in ten years, we lost 60% of the volume, and just to put it in terms of revenue, 14 billion dollars of revenue for that revenue stream. if we didn't have that drop off, we wouldn't worry about prefunding health care. >> i understand. ..
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>> yes, definitely. we will stay involved. as i mentioned in my opening statement, postal services on a high riskless. do a keep it on the high riskless control problems have been solved. once legislation is passed, we won't take it off until implementation is achieved as the social service. we will stay monitoring the situation providing regular route towards. >> based on metrics as well as what you've established. >> that's exactly right.
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we took them off too early before. omicron and make a choice. >> at number 10 anomic tennis. all of questions for the next panel. thank you. >> thank you, mr. chairman. i went to thank you for doggedly working on post-reformed over the last two years, but especially last year and u.s. senator lieberman, senator collins and senator brown has supposed reform bill. a lot of people said you couldn't do that come us to thank you for your hard work. been assuming that mr. donahoe, you would agree if the house had taken that the senate bill were passed a bill similar to that and got to the present economy would not have recently made this amount on the saturday delivery that the bill the senate has had provisions in the two make sure this wouldn't happen for a couple years. do you agree with? >> would need to move as quickly as we can canonically changing
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delivery schedules. sometimes people think that's not a lot money, but to us it's a substantial amount. we need to move on package delivery and not so are proposing. >> i don't want to bring up a touchy subject, but let me go ahead and do it. and that is your legal authority for ending saturday delivery. i know that in the appropriation bills over the years we've put provisions in the appropriations bill that basically say you have to deliver on saturdays or six-day delivery and there's public law 112, 175 that continue a perp grecians resolutions to the act of 2012 and there's a section act, section 101 specifically extends the funding levels of the fy appropriations laws under the authority and conditions
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provided in the previous funding resolution except otherwise provided that the cr micr doesn't have the language. could you articulate for the committee, your legal authority under current law to add saturday delivery? >> we have over the course of the last couple of years looked at everything we do. our networks, how we deliver, we provide health care, everything including a 65 day. i've talked to you as part of our testimony about how we know we can save $7 million with their own health care plan. we challenge ourselves to figure from a standpoint of the legality of the 65 day mandates and our interpretation that we are clear to move ahead on this. we have time because i know people are said to me, there is a cr that expires at the end of
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march. i would implore this congress not to put any other restrictions on a survey 65 days. prelaw substantial volumes. we lost over 30% of first-class volumes. business senders, receivers to the right thing, be responsible. people are said to us, i want my medicine in the mail. we're going to do that. i want my ebay and amazon packages. or going to do that, but we cannot support a substantial $14 million loss to continue to prop up if it's not needed and there's no demand for it. >> i was in a question. the question is what is your legal authority? you're satisfied. i'm not and i'm not sure the committee is. i'm not sure the congress is. you don't have to do it right now, but i would like you to
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articulate and writing which are legal authority is. >> we provided a nine page legal opinion to your staff. so my attorneys to be more than happy to talk with you. let's move away from the 65. its liquidity we need now when we need to move ahead and changed these delivery schedules. >> in 2011, congress must act to allow the postal service authority to determine. >> i agree. in 2011 and 2010, i also thought we were found by a health care loss without we had researched. we have found a way to change health care provisions provide better health care to employees and retirees and health care for employees. it's the same approach.
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people have accused me of moving the goalposts. you don't want the postal service to fill in this country. it's my responsibility and have taken responsibility to do everything in our power. please do not force us to let us make the move in august, people make sure we deliver what people want and that's packages. thank you. >> thank you, mr. chairman. >> before you recognize senator loven, what you said, mr. donahoe is a toothache is that on this quite >> if we were still here in this committee and in this chamber, senate and the house, or for here the fifth debating this issue in poster for legislation, we have failed. i think my colleagues, we have no intention of these issues.
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i call this the first overtime. i want us to get this baby down. with cybersecurity unless immigration reform. senator loven. >> thank you, mr. chairman to you and dr. coburn. we do have hope of getting a postal reform bill done again. we did it last year without getting the house and provisions in their. more important and so we have to continue to live in that direction. i'm not satisfied with your answer to senator pryor's questions, postmaster. first of all, the legal opinion which he sent to the committee i guess i haven't seen it. mr. chairman, do we have that legal opinion and is so comic and the rest of the members give some copy other?
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>> we need that legal opinion. >> i'd be happy to attorney spent time, too. >> you asked us not to act and what strikes me as the difference doesn't make whether we prohibit what you're saying you're going to do or not. apparently you believe you have the legal authority despite what congress has said to cancel the six-day. >> what i am asking is that congress would not put it -- implement any language that would prohibit us from moving away. >> what i'm asking you is that difference doesn't make whether you put the language and are not. despite that language you have illegal authority to cancel the sixth day. >> better interpretation. but i'm asking is please to not put language in it says
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specifically you can't do it because i would obey the law and wouldn't do it. >> that's important to hear, you did say congress must act to allow the postal service the authority to determine delivery frequency. he said congress must act and we did ask. despite what is in a while, your lawyer is apparently saying you can cancel that six-day. >> is important that we sit down walk-through interpretation of the cr versus the appropriations. that would clear things up for my opinion. >> we look forward to reading that opinion. i did send you, by the way, you've been responsive in terms of certain information i best relative to the contracts with fedex and with ups and we appreciate that. we understand they are provided to us confidentially because it is certain information in there,
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which is proprietary. fair enough. we are not able to act on that. i can't do anything with it under the condition which is given to me and i'm not going to violate that condition. on the other hand i am handcuffed. didn't support there be oversight of those important contracts. they're important to us and important to private entities. fedex, ups are profitable. we deliver a lot of their packages. there is a benefit to us. we apparently make money in those contracts as well, but in terms of the relative tennis, congress has to have some mechanism for to oversee contracts. i don't know whether the g8 who could do it. do you do that? >> sure, we are better by the same disclosure. >> you can give his conclusions.
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>> i'm not able to handle the material because they can't do anything with it. >> we compete them. every contact in the social the congressional oversight of your contracts. we don't have that oversight now, so the gao can give is that review to be restoring to all of us. i'm not suggesting anything other than congressional oversight unless we can have some entity that's able to get conclusions on it. is that something like to see done? is set to the chair whether or not to think that if something appropriate.
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>> you're certainly welcome to that information. >> and we asked the gao to do that? >> when we talk offline and do that. >> i would ask them to consider that. my time is. thank you, mr. chairman. >> i would ask dr. coburn for another round. he said if we do that will be here till supple time. -- suppertime. we are going to forgo another round. i do want to follow up on the questions. we appreciate for dr. coburn and myself a nice pass and others on the committee have received the same document. postmaster general has offered to send their legal team.
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the state cannot thought not. the other thing i want to say are closing, it's very much for coming. it's been a very helpful earring. sometimes people hold hearings to be able to put a spotlight on a problem. sometimes they're embarrassed,, sometimes not. one reason dr. coburn and i do hearings in most cases is to find out how do we get to yes, how do we resolve this issue? how to resolve this problem? it a safety seat, but this is then we can solve. the first two panels today with the house here in the committee is all very encouraging. we still have a few notes ago.
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last thing i want to say, one of several banks that my family uses when they first start offering service in delaware, i go to my atm machine and i put it in and the message pop up in the window at the atm machine would say the name of the bank and its a friendly, but you get used to it. i think that's for delaware. i noticed this year and airplanes that most of us don't like the security checks at airports. i noticed at first it is my imagination. i'm sensing a greater friendliness and helpfulness. i'm not sure it's my imagination or not, but the guy who runs
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tsa, i think they are beginning culture changes. i want to say when i walk into a post office, and delaware for the most part they like me. they're friendly and so forth, but too often i see post office is that i would not describe this friendly and welcoming in some cases folks who provide service behind the counter had so much on them trying to grapple with the challenges and i can understand that. i would ask we move forward and hopefully emerge on the other side of the river do we focus more on a customer friendliness. also as we go to the post office to drop off packages or buy stamps or whatever. >> not many more people do more oversight than we do.
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i trust general donahoe. it's in his best interest as kind of like us telling nih which elect john microscope to buy. there comes a point where we are questioning everything. the fact is we need to question the real problems we have right now in terms of service, delivery and price and we need to give the post office of flexibility to do what they can do to prepare to offer that service in a way that puts them back in fiscal health. and i think we've got a great team there. we've got great employees all the way down the line. we need to give them the flexibility to do that. i'll emphasize again our problem at the post office is with 536 postmaster generals and until we change that unless somebody run the post office and let us look
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appropriately at their performance rather than second-guessing every small items, were never going to get out of this. i fully support you going to five day delivery. i think it's an absolute must. all were going to do is raise $4 billion we could have saved in a time when we ran huge deficits and expand bartering capability to do that. thank you both for being here. >> with that gentleman, thank you for your input today. good to see you. >> , max, leaders focus on playability of the u.s. postal service. they expressed strong opposition to postmaster general donahoe's decision to end saturday delivery beginning august 5th. this is just over an hour. [inaudible conversations]
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while her witnesses are gathering for the third panel, let me just take a moment to express our appreciation for members to our staff on the democrat and republican side. one of the things we aspire to do is have differences from time to time, but i especially like the idea of members working together and staffs working together. we've got a lot of cooperation to put the panels to prepare for this hearing. thank you all for your work on that. panel number three, third and final panel. i like to say we are saving the best for last, but the other two were pretty good, so we will see. just very brief introductions for a third pml.
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and then we'll ask them to proceed with their testimony. first witnesses cliff guffey. good to see you. mr. guffey has served as president of the postal union since 2010. we enjoy working with you very much. next we have the sub one. basis up to you -- [inaudible] i asked to introduce you. we're glad you're here. jeanette dwyer, president of the world letter carriers association. here, right click since 2011? very nice to see you. we've got three presidents here. national association of postmasters. i think your third year. thank you for joining us today.
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were you from, mr. quadracci? >> wisconsin. >> senator baldwin was here earlier. she has another meeting she has to be at. if she was back in time she wanted to introduce you. i'm hoping she's going to be able to. we are glad you are here and she is so slow. you're the chairman and president and ceo of quad/graphics, a printed company founded by your dad in 1971. it is your son or daughter going to take it over? >> and three daughters under the age of 11. we have a ways to go. >> you can never start too early. finally mr. geddes at cornell university and visiting scholar of the american enterprise institute. last week you weren't available to do it in dr. coburn said it
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was wisely thought we should wait and i think you're worth the wait. we're delighted you are here. welcome. i'll ask you to keep your entire testimony, about five minutes. >> good morning, chairman carver, dr. coburn and members of the committee. im cliff guffey and msa have been hard by the cooperation between the parties here today. mr. innocent american citizen to see how this is plain out. the postal service has an income of $65 billion a year. the chief financial officer reported recently postal service has an annual cash flow of $140 billion. that's one way to measure the postal service to our economy. in addition to the business, support to ordinary citizens. many towns, cities have protested against the closing of
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mail. the post office is an important part of the town's identity and communication center. many people do not have access to the internet. according to recent study by the pew center, one in five do not use the internet. 40% of american bills do not have broadband access. senior citizens, those with less than high school education and those in low income households are the least likely to have internet access. for the 36 years before the passage of the p8 ea, the postal service is always changing from a manual process seen operation to an automated operation. to those changes come and spend the world's best postal system. to do this by identity technologies and challenges. the postal service has been well aware of the impact of the internet in developing strategies to deal with it. from 2000 through 2006 before
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the passage of the p8 ea, postal service reduced approximately 100,000 people, almost 80,000 came from representation. since the passage, they have reduced employees by another 86,000 employees, but the trend to did not change. the postal service is in the middle of a rapid change. change is an ongoing process. unfortunate the crisis for retiree health and if it is to go too fast and too far. it's on the brink of coming services in ways -- the service by making it less useful. this'll be a tragic mistake and it's unnecessary. calls for privatization would take policy in the wrong direction. universal service has been provided without any government
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subsidy. privatization would lead to a loss of service. there's enough mail volume to continue to provide universal service. we need to consider postage rates of service can tinea. postal rates are low compared to other industrialized countries. this includes for postal services have been privatized. i read slower. we appreciate the leadership of chairman carper and the problem caused a predefined name benefits. did $46 billion for health benefits, something more than enough. senate bill 1789 but is made another important change to offer additional products and services. the federal agencies and local governments make services more accessible. it's a number of ways for the postal service to provide useful
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services to the public while increasing revenues. these include secure digital mailboxes. they provide banking services for people in need of an expensive and readily available banking services. these changes are necessary. we need to preserve post office is for communities they serve. but these changes, the service can provide services in that new services. we urge congress to set the predefined requirement to have the cap on postal rates and authorize the postal service to provide additional services. the time for action is now. we'll do what we can do to help congress and the service make these changes. >> thank you so much for being here, for your leadership in those comments. president dwyer, welcome. >> chairman carper members of the homeland security and governmental affairs committee. my name is jeanette dwyer and i
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president of the national letter carriers association, which represents over 113,000 bargaining unit employees. our crack epitomizes the concept of the universal service by providing these services in rural, suburban and urban areas to the united states, including places the postal service competitors do not go. we do this in the most cost effective way. letter carriers are paid under his systematize salaries to a variety or other factors. particular to individual rows in good times when a row grows, salary increases. when volume goes down, the carrier may receive less pay. were the only postal employees to the postal service. letter carriers to their part to generate new business and revenue for the postal service
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said the rural letter carriers actively approach businesses on their route you think editors. as of february 1st, 2013, more than $313.5 million in new business for the usps. the nrlca and its members care about the postal service and its service to americans and we are turned about the apparent direction it is going. the postmaster general sainthood lemonade saturday mail delivery will destroy the postal service. the nrlca does not support this plan, nor do we believe the postal service can implement the plan without congressional action. the post general himself recognizes he could not circumvent congress to implement his plan. the postal service states in its question that in order to eliminate saturday delivery, congress must elect the
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legislation to deliver six days a week, unquote. postmaster general donahoe has testified twice before congress before the same committee. they're asking congress to enact legislation that would grant him the authority to reduce mail delivery five days. he said in savanna georgia international convention, before 3000 carriers and their families whether it is a current postmaster general for his predecessor jack potter, both have recognized at the postal service wants to eliminate the day of delivery, they must first seek congressional approval to remove the six-day delivery requirement for the relevant legislation. we share the same concern echoed by senator pryor family then.
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so why does the postmaster general now believe he can eliminate mail delivery without congressional approval? beyond questioning the legality of the action, there is also good reasons to question the postal service claim of how much money was saved by reducing service. in a recent letter to postmaster general donahoe and regulatory chairman and congressman gerry connolly expressed their concern with the usps did not consider the impact of eliminating service on rural and remote communities. we believe since they deliver remains a critical strength, that will enable it to grow business in both the revenue over the long run. indeed, the postal service can ill afford to eliminate fixed e-mail delivery.
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the nrlca believes any savings by reducing delivery days will be offset by the lost revenue that will occur when consumers and businesses flock to the postal service's competitors to have their mail packages and products delivered. less service equals less mail equals beginning of the hand for the postal service. and then there are jobs. at a time when unemployment hovers at 7.8%, this is no time for massive layoffs. we put the postmaster general should really underestimate the jobs lost when he put that number at 22,500. they would experience a loss of approximately 20,000 jobs. that number could reach upwards of 30,000 jobs depending on availability of work. mr. chairman, the postmaster general was dead wrong when he stood up at his press conference and said he would talk with letter carriers and support the reduction of five day delivery.
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i can assure you rural letter carriers do not support the elimination of saturday delivery. the nature in which the postal service announced its decision to eliminate saturday mail delivery is traveling. first postmaster general donahoe gave us less than 24 hours notice that the amount and. furthermore, the nrlca has received reports that the country has conduct is standard tax to carriers and employees regarding this plan. managers have reduced employees to tears with warnings they will lose their jobs. think about getting this news being sent to deliver mail to customers who are surely going to question you about the postal service's plan. this is not the way to manage a business. maintain harmonious labor relations or bolster employee morale, especially in an organization that consistently ranks as the most trusted
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government agency because of the loyal, dedicated and trustworthy employees who make up its work force. i must point out the severe hardship that would be remiss if our customers and small businesses lost a day to stand and receive mail. we cannot afford to move backwards. we must continue to provide service our customers expect. thank you for allowing me to testify before the committee today. i'd be happy to answer any questions you may have. >> thank you for accepting our invitation today. president rapoza, please proceed. >> chairman carper, ranking member coburn, i am rapoza can the president of the postmaster said the united states and postmaster in hawaii. last year members of this committee provided a 1789. we recognize the legislation was
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imperfect but i've had the opportunity to provide the postal service with essential breathing room to restore the postal service to viability and we look forward to joining the two this year to advance meaningful legislation. i think constructive postal legislation, the postal service responded to those challenges that are within our control. at the very least, it is time for congress to pass legislation that addresses those challenges that congress may have created. this related story leading to disaster consists of nonstop cost cutting by the postal service, unfair congressionally imposed financial obligations and failure to reach a compromise on fundamental differences regarding postal legislation within the congress. one of the most damaging impediments within your control is the statutory requirement
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that the postal service pre-fund 75 years of retiree health benefits. no other entity, public or private is under such an obligation and 70% of the postal service's recent losses are tied to this pre-funding requirement. cheekiness can down the road has already damaged the image of congress as well as the postal service's ability to provide service that americans expect and deserve. they have made sacrifices as the postal service attempts to drive down the cost of providing an essential public service. with the implementation of the initiative bonus cosigned, physicians have been reduced and upon completion, more than 50% will offer the public six or less hours of service.
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american access to post offices will be based on work hours with both postmaster organizations working with the postal service to save universal service by reducing post office hours to earn workhours. convenience and accessibility will be in your hands. let me know that revenue generation must be included and legislative relief. congress should enable the postal service to expand a variety of products that can be mailed to include wine and spirits and future legislation should authorize greater pricing flexibility within its dominant classes of mail. the postal service must be in a position to capture a significant share of it. it provides a major competitive advantage to the postal service's participation in the partial market.
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it is crucial they partner with other federal agencies and municipal government in delivering essential government services. for example, we understand social security administration is exploring the use of social security as an alternative paper checks for beneficiaries unable to utilize for those who do not want direct deposit annuity. the post office could verify identity and residence in the local post office could be worse such cards could be reloaded on a monthly basis. it impacts communities the post office could be the distribution point to assist in relief efforts. sanders, will be a sad day for the american congress, for america if congress is incapable
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of reaching a compromise and meaningful postal legislation. as we've heard this morning, some due to postmaster general's recent actions as acts of desperation, which are doomed to backfire, while as part of a boat calculated plan for the postal service, and organization of which have been an employee for the past 46 years. in either case, my fear is that this congress does nothing to resolve their fundamental differences on postal reform, the integrity of our nation's universal postal system, which was constitutionally established more than 230 years ago will be irrevocably compromised. as president of the national association of the united states and on behalf of the nation's
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postmasters, i used this congress to promptly respond and assist the postal service to provide products and services americans expected mr. and i pledge during the remaining months of my term in office, they will assist them in. thank you for inviting me to testify on behalf of our nation's postmasters, the future of the postal service is in your hands and may god bless you. >> is also in your hands in the hands of our leaders and those who testified and those who would have a chance to testify. we have a responsibility to provide leadership and we intend to provide that leadership. i think we've heard from chairman issa, they intend to join us.
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mr. quadracci. pretend i'm tammy baldwin. we welcome you. >> you have actually two senators who also served, so welcome. >> thank you for giving me the opportunity to talk about the impact of the postal issues on our industry. mr. chairman, as you said, quadratic service founded in 1971. a standard and 69 comments you can imagine i've grown up around it by entire life. ink is pretty much amazing i know a lot about it. i know at the end of the day print is not dead. i know i am supposed to think it is sad because i read about it a lot in print and is nothing
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further from the truth, but this had challenges with it. at the end of the day, print is continuing to change and that's an important fact that everybody has to keep in mind that how we look at print historically is not how it's going to be used in the future or even now. when we think about comparing to other countries in terms of the rate system we have, from a marketing standpoint, this is the most competitive i've seen them are operating all over the world. it's not apples to apples to see how it's used elsewhere. examples of how it's changing in the post office is helpful with the advent of things that are qr code, marketers try to figure out all different media channels. the days of approach where you have a print strategy, online strategy or tv strategy are over
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and everyone is trying to look horizontally and statuses were together. we were able to help customers to product demonstrations so when he saw the product print, you immediately saw a product demonstration, which led to a 20% in greece, says a perfect example of how media channels come together for the immediacy of print to be more important than it was for the past because the consumer is very finicky. the only media channels they've ever, our smoke signals and morse code. figure it ambidextrous. one of the main points i wanted to make this print is important, but it's changing rapidly and marketers change have you said. the other important thing to
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note is the post office maybe $65 billion business, but the rest of the industry associated is $1.3 trillion business with a .4 million americans being supported by it in some way or fashion. wisconsin allowed with over 2,200,000 people who rely on the post office for what it is their jobs. what we see is a crisis of confidence. the rate at which we solve this is causing problems in our business. the uncertainty is fair. i'm not sure what to do. they are trying to figure out where they spend their money and they have it figured out this marketing scheme vm. we had the same conversation and they said about the change in strategy was the number is being
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delivered. sales on weekends are extremely important to us. so i urge this committee to move forward. i've heard a lot this promising that we do the solutions here because our customers are demanding it in the competition is real and it's out there. and people don't have it figured out, they may move away from a medium that may hurt them in the long-term to solve that problem. the other thing i want to talk about is the importance of rightsizing meshed, we had to resize their shape. the industry lost 25% of its volume. we ended up acquiring whatever larger competitors because they couldn't keep pace. we ended up closing over 21 facilities to shore it up and make it sustainable. without taking the curse out of her business, without 25%
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reduction is a reset, we wouldn't run a business today. we believe the core elements talk about today is assuring the postal system has the authority to make those changes to reduce the infrastructure. parameterization for pre-funding retiree health benefit return overpayments to his first program that provided the managed health care. there is space to pull cost out how much has been talking about who pays for what is supposed to the cost out. we do it at about 25% to 30% last banal industry. so who would've thought managing your health care are paying
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attention to them they should be part is could be a printing company. the other people working with primary care is his focus are seeing the same things. so thank you for letting me share my points of view. >> dr. coburn and i have a huge interest. the last part you talked about. as i said earlier, long-term sustainability is getting good health care. to do that will drill down. we're happy to be here this week to look forward to your testimony. welcome. >> is extremely honored to hear you say you saved the best for last. >> does before i heard mr. quadracci. keep me honest. >> i'll try to project.
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i'll thank you for this important issue. i'm excited the committee is taking this a. the main reason we are here today is because of fundamental and technological innovation in the communications marketplace. i do this story we talk about today is a very old story of industries that either adapt to major technological changes where they end up being crippled as a result. postal services in the long-term can go in the horse and buggy for the automobile for the old slide rules some of us might remember in the age of the calculators. international experience is far ahead of the united states regarding how to tab to change is extremely helpful to what we can do. the technology we work as
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communications for the close substitutes, including e-mail, text messages, telephone calls, things that come down the pike pretty soon. this is weakening. the core reason for the postal service's current legal structure and is really reason for being delivered at the first-class letter. a recent example of technological change than many of us are familiar with this netflix, which used to send any first-class dvds to the mail, moving to streaming video. first-class mail volume has declined by 413th since 2001. this is a big issue for the postal service because letter mail us by five and most profitable project. they make three times the amount of profit per piece on first-class letter mail that they make on a piece of standard or advertising material. that's really rather profit is.
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there is too broad postures for reactions that one can have to such a technological threat. one can either shrink from it and try to say we're going to downsize in reaction to this or you can embrace the tape knowledge and try to innovate in response to it. i believe the first approach which is that the postal service is constrained to do now with alien fortunate for the postal service. unfortunately, however -- for chile sa noted a substantial amount of experience in the postal sector now shows that he take a second approach you can embrace the technology, dynamic, with changing your innovate as a result of this postal sector is in a number of countries have evolved in the dynamic industries and cooperation between a whole different group of units. i want to emphasize fiber line of downsizing in the is going to
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be hurtful to the postal service. first of all, there's a natural limit to how much you can cut costs without sacrificing the postal services core asset, which is universal delivery network that allows it to take a physical piece of mail to the household the last mile. they do that six days a week. that borders on america will at the postal service is able to achieve that. the second thing is that her for 15 years the reason we need a monopoly is the idea is that a bigger entity can provide this service. so you want one entity doing it. economies of scale work. the cost per unit of the latter is going up, working against you. i view the postal service caught in a base right now between declining revenues because this
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economy of scale in the other. it's really a problematic approach to say we're going to shrink in response to this new technology. however, the international experience teaches us if we forget our postal sector in meaningful ways, we allow it to operate more like a regular business, which is an extension that created the postal service until the postal service to upgrading my business site action. let's take the next step and adopt those laws that would allow it to do that. it can be self-sustaining or even profitable. some policy can liberalize and made a sound business decisions to be innovative and much purgatorial in these existing delivery assets to create more economic value to customers with existing assets. they can even thrive in the electronic age. all members in the 298.
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sweden repealed in 2003. germany netherlands repealed respectively. competition is hot postal services become more efficient and focused enterprises in the freed up their monopolies because they realize those entities are not going to get commercial freedoms they need if they retain monopoly over the core business sector. as a host of examples i could give you. to allow private investors to help needs years ago that acquire dhl in 2001, which oppose dhl on the delivery side air in 220 countries and is now the world's largest courier country. new zealand post is widely considered to be one of the best run companies in new zealand.
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there's no reason why if we take this cue from other countries, the u.s. is behind the end of the pack at this point that the u.s. postal service cannot become a player and a leader in carrier businesses. liberalization and give it the ability to attract experienced global talent and focus incentives and give access to additional sources of capital. baluchistan with an analogy. economists have said the difference between competition from another competitor versus a new technology is the difference between breaking the door down in the door is broken down along time ago by the internet and what came as a lion and that's
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the internet. that is calling up a whole bunch of industries, including my own, massive open online courses. college courses for free. cornell has to adjust to that and we are trying to figure out how that is going to affect our business at cornell. the postal service seems to be given that freedom to adapt to this neat technology changing the landscape landscape in many businesses. i hope to be the focus we taken this and not simply worry about this cost or that cost. thank you and i look forward to answering your questions. >> thank you for making us think outside the box. how to thank dr. coburn for inviting you. i've been joined by a new member of our committee from north dakota. i went to recognize when it comes to make.
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>> a brief comment is providing i was unable to attend the whole hearing i obviously have great concern particularly about rural delivery. what happens when the economy when you eliminate the monopoly, the economy still at work economically in your favor for the guy at the end of the line and we know and i'm sure the people here representing the rural carriers know the importance of that as a social connection for a lot of people as well as connection to commerce and business. for he appreciate your comments, mr. chairman, my concerns are going to be how do we continue to deliver what is mandated in the constitution to those people at the end of the line and how do we continue to have a viable post office in light of these challenges and i really
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appreciate the opportunity to hear this part of the power to deliberation of the committee. >> were just happy you're here and we appreciate the fact the u.s. much is anybody will be presiding over the senate. so we can work on this together. were going to get this done. thank you. i want to go back to mr. quadracci. he talked about health care. i was broke up with employers talk about how they get better health care results for less money and move from what i call a stove pipe fee-for-service delivery system to coordinate delivery of health care and really smart to be able to incentivize personal responsibility for health care and focus on wellness and prevention rather than a sick
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care system, but having a health care system. here's part right. maybe we can learn from your company and take them too hard as we postal reform. please take a minute or two to tell us what you're doing. >> 23 years ago caused of health care is going up too fast. imagine today. what a concentration -- >> roughly how many employees you have? >> 20,000. about 7000 in wisconsin. while we did is brought it back to the future, which you have your neighborhood doctor bring them in a must start seeing them there and it sort of evolved into the whole wellness programs, but really it's about preventive health care in the primary care to her in the middle of the circle and being the quarterback of what has to happen here and it's also on the
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above maintenance. it's about enlisting should be engaged to be a part of it. there is one in senator coburn's backyard in oklahoma city. it is a full clinic. ripper on ophthalmology and the longest time you wait his five-minute in the shortest time you see is 20 minutes for a hangnail because so use it as an opportunity to reconnect and find out what's going on with you. that dialogue and family lineage wraps together to the health care provider understand what's happening. instead of spending five minutes complaining about abdominal care into order $500 nra would work together to mishap and its aunt millie, that information is incredibly important and over
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the next couple of months will design a program that ends up as opposed to starting with one in my dock or they are told me i'm the sole practice the agenda he would have been fired and he would have been told to get the mri and will go on to the next test. it's incredibly powerful with 22 years and now are doing it for big companies all over the country. >> there may be some lessons learned and just with respect to postal employees, before a federal work force for less money are the same amount of money. i want to turn if i can and i asked earlier of the postmaster general. give us your three best ideas
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for generating new revenues. we know it just can't be cut, cut, cut. how do we use this enterprise to be able to generate more revenues. had to review your leadership position, give us one good idea for the postal service that can actually generate significant revenues. >> being from a rural place in oklahoma, when i wanted to change and enroll in the key benefits for veterans, i have to drive to muskogee, oklahoma. ..
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and. >> caesar whatever. that is when you get your change of address card in 20 different spots. i just think as a witness testified we need to embrace the changes that are coming and find out -- if we are going to have brick-and-mortar there is no reason for six other agencies have rick and mortar and in the same type of thing and there should be a way to find as i said in previous testimony the post office where the flag flies in the burr communities.
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and to invest in this work well so i would think you could save costs and money by putting those activities into the post office. >> thank you very much for those ideas. >> the post office has done a lot of things right recently. parcel delivery and going after parcel delivery. we need to compete with fedex and ups and real-time things that we can give to our customers. those kinds of things are the kinds of things we are reaching out and willing to work with and do that. we deliver 30% of fedex on the ground. we are delivering a significant portion of ups partials -- parcels. we need to be getting something for that and we don't know what we are getting as far as money but certainly we need to capitalize on ups and fedex.
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we go where they cannot go. we go where they do not want to go because it is not cost-effective for them. the last mile is something that we need to be building on and parcel delivery and working to go towards that. >> thanks very much. for some folks who may be watching most people don't know this but one of the nice things about the postal service is they go to most mailboxes six days a week and are able to partner in some cases with fedex and ups and get paid for it. a smart piece piece of business as you suggest we want to make sure they are being appropriately compensated for it and we will have private conversations about what is happening. i don't know but it's our job to mandate what this is and what those relationships might be but it's something to build on. thank you very much. >> we need to partner more with the local governments. there are other things we can do such as licensing and motor
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vehicle transactions and what i mentioned earlier but the social security cards. we missed the opportunity on the package business by what we are focusing on, the package business is the delivery portion. we should be looking at having areas in our post office where they can package it and then ship it out from us. we are just looking at the back and so we should take a broader look at how we can get these companies or how we can get into the wrapping of the packages and then put it out into our system. thank you. dr. coburn. >> well thank you. one of the things that mr. dwyer says and i would like for him to restate it, he said the eliminating of saturday delivery could destroy the post office. i think that may be a paraphrase of what you said. would you explain why you think that and what do you see as the
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events coming about if let's say it happened on august 5. tell me what you see happening because of that. >> let me say them and make it back to something else i set my testimony. less male equals the beginning of the end for the postal service. services with the united states postal service is all about. in eliminating that day of delivery takes away our competitive advantage. there are companies and there are people who will pounce on that. they will be more than glad to give that one day of delivery. the problem with that sir is they not only take one day of delivery, everything they have been mailing through the united states postal service now walks out the door. >> who are those people? >> there are plenty of people out there. >> give me an example of somebody that you think is going to do that since to build the infrastructure to get the last mile is so competitive, the two
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smartest package delivery people besides the post office have decided they can't afford to build that infrastructure. tell me who can build that infrastructure to continue with that? >> i can tell you who would do that right now but i can tell you that data does not tell you what walks out either. >> let me ask you the other question. if the services that important why are we delivering on sunday? i mean, taking your theory -- to let me finish my question here for a minute. eliminating saturday delivery, there is no question that when it was studied by the gao when it was all eliminated in finish of the savings, if you do parcels on saturday, if in fact your theory is right than what we have to be doing is gearing
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up to deliver on sunday. and so, but i heard nobody testified in four years from the post office this says we have to go to an additional day of delivery. my real question is, i don't see anybody out there with the capital available to build the infrastructure to go the last mile. and i think there are some real data to say there are some savings whether it's 600 billion a year, $600 million or $2 billion a year in terms of doing that but there is nowhere in the constitution that says you will deliver six days. nowhere does it say that so the question is, i understand the concern, and i can certainly see it in terms of apparel to the letter carriers because of their compensation. it will impact compensation if we eliminate saturday delivery, will it not? >> yes, sir. >> and so that --
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and i have one other question for ms. dewire. >> can i finish answering that one? >> let me put this point in you could do want, how's that? mr. guffey testified they support the post office's ability to have great flexibility. in other words if they see a spot where they can raise the rates they shouldn't have to wait to go through the process and should capture what is of value based on their service. there is a point where increasing demand for succinct reasoning pricing -- to do the rural letter carriers support that philosophy by the post office's ability to do that? >> yes. >> answer how you want to. >> can i do that? we have a pilot program at amazon which would be seven days a week and we are testing that right now. the problem with all of this is all you hear is negative publicity. we don't hear any positive publicity about the postal service. you don't hear that we are doing
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seven days a week. all we are talking about is how we eliminate. how do we slash and cut, not how we build and go to the rules committee and not how we support the people who are working and chairman issa said we take it is a bad thing that we have job loss. yes sir, we do. we have 38% part-time employees that work on saturdays and replace a carrier during the week. their jobs will go away. those are middle-class jobs. those are minorities and women. those are veterans and the postal service has approximately 25% so yes sir we do care about jobs. >> senator heitkamp i'm going to give you another shot for anything else you would like to say, anything you want to add or
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take away. >> i do want to add to what you have been talking about in terms of the synergies between print and other forms of media and how eventually people are going to catch on how important print is too reinforcing an advertising message and reinforcing political messages. we saw obviously latta printed my state so my question to you is you know the timeframe and a direction because it seems to me that one of the things that the post office has is the ability to meet the six day requiremerequireme nt and the ability to reach every person. television doesn't do that anymore because television, you get cable and regular service so one thing that the post office is universal and that is their marketing niche. if they lose that marketing niche they lose their value to
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you but we need to know how we can and when we can see that kind of click in new marketing strategies that will again bring back some additional business to the post office. >> well you are seeing it and you may not know it, but at the end of the day when you think about what is good about print, it's a passive medium. the old adage put the right product in front of the right person at the right time and you may get something. the problem with on line is it is more about search and active participation so from a marketing standpoint print is really powerful for keeping people's attention. what marketers are doing today, we do a lot of virtualization so you have the efficiency that maybe you are doing a million versions of that catalog to 1 million people. maybe just bundle change here in one little change their neck creates a response.
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it is proven and we have been doing it for years. now what's happening when you think about global technology as the example i showed showed you before work to mediate you no longer have the break in the chain where you get that impulsive, oh i like the product and now i have to remember when i go on line to look at it. now it's immediate and you can make things happen. it's already happening and you you will see some things that are subtle and some that are not so subtle and really respond. i wish i had a crystal ball as to what the timeframe is but it's really the consumer. >> if i can just follow up one more point. >> i don't know, you were pretty junior. [laughter] go ahead. >> how was the lack or loss of universal delivery effect that outcome? >> you know, i think, i said
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before that with the new channels abroad is a degree of need for immediacy in your marketing channels and my concern, and we have different categories of customers who will be affected in different ways on the six day to five day. some agree and some don't so i'm not going to pass judgment on that but what i worry about is how print will be used in the fact that now with some of the technology we can pull print closer and make sure it has a multichannel approach. it can start to degrade that and so that is why i said, i put some caution out there not about what we do now but about how this is evolving in the future because the immediacy of things is really important to markets. >> thank you. >> i had one other question for all three of our president. you heard mr. geddes' testimony about what's happening in the rest of the world in terms of postal organizations.
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what is your gut reaction to it and what you think about it? >> a couple of things. the idea of allowing the postal service more freedom to do things is a good idea. i think when you start comparing hard national delivery systems from alaska to florida from maine to the y and islands universal cost and you start talking about new zealand, it does not -- the same thing with germany. if you look at the size of germany and the real system. the postal service used to run their rail system. they would have a high-speed rail throughout the whole country. time ways they can put the mailman trained. we don't have that in this country. germany has universal health care for everybody in the country. we are paying for health care. which is something else i would like to mention real quick way. the postal service's plan, they
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want to take us out of the opm health care. the oig, inspector general of the postal service looks at that $63 billion would save over x amount of time and 37 billion of that or 42 billion of that excuse me would go directly into medicare shifting costs and to medicare and taking it off budget and putting on budget for you guys and you have to match that 42 billion from somewhere and another $13 billion would be transferred to the workers. i think they're a means for us to sit down with the post office and negotiate some kind of single-payer plan within the postal service without going outside and without transferring money cost to the federal government. >> our country, the united states of america is the most affordable postal service and the world. when you compare us with other countries they certainly are more expensive than they do not
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deliver to a universal network. we have south dakota, north dakota, montana, those states in rural communities throughout this nation that depend on the united states postal service for an affordable postal service and i think we don't need to get away from is it affordable and is it affordable for every united states citizen? i think america has a history of caring about their community and i think that is what you have got to look at. can i say something about the health care on the health care issue, i agree with what he said we have looked at that plan but our letter carrier plan we have 96% of our membership under medicare a and d. the postal service and their
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financial predicament today can get the money to pay the claims for those employees who would file claims in the health care plan. >> mr. rapoza? >> i agree with what i've heard here but we do have the best postal service and the world. we are going through some turbulent times now because we are so used to adjusting and now with a decrease that we are going to adjust them when we are done with all of this the other countries will be looking at us and how we can continue to maintain universal service with low cost. i would stay with what we have. what i take from this is one of you all have missed one of mr. mr. geddes' main points. you can downsize and i would love to get his response to what he said. >> thank you senator. i naturally respectfully disagree with my fellow
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panelists. some of these countries that have liberalized and new zealand is a sparsely populated country, the population is concentrated in christchurch and a few other cities. it said lee concerned about the citizens that live in the more rural areas and they been extremely successful. australia has a population the size of the lower 48 states. it's extremely rural country with a very concentrated cities. one thing i would like to stress senator and with regard to senator heitkamp's remarks is the link in the notion that we have to retain a monopoly in the state-owned enterprise structure to ensure universal service is simply false. it's just not true that you have to do that. you can ensure universal service in several much more efficient
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ways to enter a governmental monopoly and i've written about that and some other venues about bidding for routes where you bid on the basis of the low subsidy you will accept. what that does is inject one of the most powerful forces in economics in one of the most powerful forces for social good in the equation and that is competition. you can include the postal service and you can include ups and if you liberalize the factor you can have many bidders. it's non-sequitur to say that we must retain two monopolies. we haven't discussed the dell box monopoly that there are two monopolies in the united states plus government -- government ownership structure to ensure universal service and in fact i think the universal service would improve in we could more precisely defining consider the standards to enforce contractual
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arrangements if we inject the competition into each equation. as i noted all 27 countries that are members of the european union including hungary have repealed their post-monopoly. they are just as concerned about universal service as we are but they have gone through this whole process 10 years ago and they made that decision. >> i would like to thank all of our panelists and appreciate you being here. you have heard both from the chairman and myself say that we are committed to try to fix this problem and we thank you. >> i said i would do the benediction so that is what i intend to do. the chaplain is here and -- he reminds us all that the cliff notes in his testimony that a goal as is a goal. it's not just the cliff notes in the testimony that catholic
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protestant jewish muslim and almost every one of them you find the golden rule. that is something i use for just about everythineverythin g i do in the same mr. right thing for all of my colleagues. i would like to say as we go forward it's good to keep in mind picture we are treating our customers, post-office customers the way we want to be treated and make sure we are treating the employees of the postal service the way we want to be treated and try to make sure that we are treating the taxpayers of our country the way they would want to be treated. the postal service has used up its line of credit with the federal government. when talking about the role of government i'm a recovering
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attorney and heidi is a recovering governor but one of the things i say, senators don't create jobs. governors don't create jobs and presidents don't create jobs. what we do is create a nurturing environment for jobs and part of that nurturing environment is the postal service and the ability to deliver six days or seven days a week some of the good services that are needed and demanded. but the heart of what we need to do to be part of that and are chairing environment is to provide certainty and predictability in the postal service needs to be able to offer that to their customers. and i think employees as well. one of the best ways to grow an economy is to provide certain predictability in the postal service and i leave this hearing today not discouraged, not ready
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to throw up my hands but he needs. i was encouraged and there's a good spirit in this room and there's a good spirit of cooperation within this committee. i think we have got a lot of partners that are going to help us solve this problem. our society changes and the world changes in which we live and operate. we are going to solve it for now and hopefully put it in place so is the world changes in the market changes and the people change we will meet those needs. for all the folks here today the first panel in the second panel we appreciate very much your input. again as i said earlier we are in overtime here. we didn't get the ball in the end zone and went into overtime and i'm not interested in two or three or four overtimes. i want to get this done in the first overtime and provide that deductibility then we can move on to cybersecurity, immigration
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reform and a whole bunch of other challenges that we face. it's been a good day. i said we would he done at 1:00 and by golly it's 1:00. with that, this hearing is adjourned. thank you all.
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>> he thought she was the smartest person he ever knew and he knew how much she loved him, and he knew that she was telling
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the truth. she wasn't going to -- that's right ,-com,-com ma she wasn't going to sugarcoat and one of the tapes that i absolutely love that came out was the one where she is analyzing his speech. he asked her to do it but she was really tough on him. it started out nice. [laughter] mother always would start off nice, but you know she says no i think you should do -- to end he would tell me all the time, your mother has the best judgment of anybody. you should always listen to your mother, and he was just devoted to her.
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wednesday secretary leon panetta held what could be his final press conference as head of the pentagon. he announced the creation of a military award called the distinguished warfare metal. the secretary also talked about north korea's nuclear program. the troop drawdown in afghanistan and the series of automatic spending cuts called sequestration. secretary panetta will retire pending the confirmation of defense secretary nominee chuck hagel. [laughter] >> you are on your own, kid. >> good afternoon. as you know, this is i believe my final press conference here at the pentagon briefing room. there are moments when i thought i was part of the last act of an
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italian opera and i'm not sure exactly when it would end. i think that the congress will act, and that they will confirm chuck hagel this week. what i wanted to do was come down and use this opportunity to first of all thank you all, all of you that are part of the press corps here and the press in general. throughout my 50 years in public service, i have always believed, believed very deeply in the role of the press. because i believe deeply in the role of the american people in our democracy, information is a key to an informed electorate.
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and while we may or may not agree with every story, in the grand scheme of things, because of the work of the press, i believe the truth always comes out and in and, we cannot really serve the american people well ms we deal with the truth. and so my thanks to all of you for the role you play in helping present that to the american people. what i would like to do is obviously through the press, express once again my deepest thanks to our troops and to the american people and to the president of the united states for the distinct honor as serving as secretary of defense. i was recalling with a group
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today that i went through rotc in college and at that time when you graduated, it's like one of those old movies where you had the graduation gown over your military uniform. i received my degree and then we took off our downs and in our uniform receive their commissions. little did i know the time that happened at santa clara university that ultimately i would he hear serving here serving as secretary of defense. ..
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>> i have always felt in seeing the great work that they do, day in and day out, that those performed in an outstanding manner should be recognized. unfortunately, those that might be eligible for the simply were not recognized. there is that kind of contribution. for that reason, recognizing
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these technological advances, i am pleased to announce that i have formally approved the establishment of a new distinguished warfare metal. it provides department ride recognition for the extraordinary achievements that directly impact accomplishments. our military reserves, we will continue to recognize our heroes. we should also add the ability to honor the extraordinary actions that make it true difference in combat operations. the work that they do, the contributions that they made, it does contribute to the success of combat operation. particularly when they removed
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the enemy from the field of battle. even if those actions are physically removed from the fight, the distinguished warfare medal now has that ability. it will be reserved only for those who met the highest standards. this award recognizes the kind of technological work that we are engaged in the 21st century. honestly i would like to join president obama and commending our troops and condemning north korean nuclear test. we are still trying to figure out whether or not it was a nuclear test. this was a clear violation of
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north korea's own commitments under the six party talks. it is undermining regional security. the actions are increasing the risk of proliferation. further isolating north korea from the international community. there is no question that north korea constitutes regional stability that is lacking. combination of a regional missile test that combines with this nuclear test, we believe it represents a real threat to the united states of america. make no mistake, the u.s. military will take over necessary steps to meet the commitments of the republic of
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korea and our regional allies. i was pleased yesterday that the u.n. security council it condemned north korea's actions. this is a strong first step as we work to increase the pressure on the regime with new sanctions and new steps that we hope to take with regards to our presence in that area. i was very pleased that the president made clear that the looming budgetary cuts -- as you know, the joint chiefs of staff have been on the hill this week, making a very strong case as to why we need to resolve this self-inflicted crisis. i would again strongly urge the congress to heed these warnings. as i have said last week, this
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is not a game, this is reality. the fact is that even as i speak, people are being hurt. people are being hurt by the budget uncertainty that this country is now living with. there are salaries that are being cut, jobs are being lost. there is readiness that has been impacted. the uncertainty is hurting people, and it's hurting our country. members of congress need to understand that they were elected to protect the public, not to hurt the public. i hope they will remember that as they hopefully work towards a real solution in this issue.
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in the context of the broader campaign, when i became secretary of defense in 2011, with the surge fully in place, a number of american troops on the ground at that time, about 100,000 -- these additional forces had expanded their footprint and pushed insurgency out of its traditional strongholds, particularly in the south. in the months since then, the united states and coalition forces have partnered closely with the afghan forces which now have grown to a full strength of 352,000 personnel. those afghan forces are now leading 90% of security operations across the country. security for more than three quarters of the afghan population come and they have retained security gains, even as
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the united states has drawn down the surge forces. a phased approach of the coming year has taken place. in consultations with the administration, i strongly supported general allen's recommendations. i was very pleased at the president's decision announced last night. it puts us firmly on a path that i believe will fulfill our mission in afghanistan. from now until the end of 2014, i am confident that the general who has taken the position, he will have the combat power that he needs to protect our forces and continue building up the
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capabilities of the afghan national security forces. the united states, agreed in lisbon in 2010 that afghanistan will assume full responsibility by the end of 2014. we are well on track for that goal and we will maintain a long-term commitment to afghanistan, including the continued training and equipment of afghan forces and counterterrorism operations against al qaeda and their affiliates. with the continued dedication and sacrifice of our troops, i am fully confident as i prepare to hand over my responsibilities as a secretary of defense, we will prevail as a safe haven. it is a set at the beginning, this will be my last press conference here in the pentagon briefing room.
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let me close by saying the following. first of all, i am very proud of the achievements that we have been able to accomplish in the time i have been secretary of defense. first and foremost, we have kept the country safe. and we have been dedicating ourselves to bringing two wars to a conclusion. the war in iraq and now bringing the war in afghanistan to a conclusion hopefully as well. we have made significant gains in weakening terrorism. i can say that i am proud of my contribution is the director of the cia and secretary of defense. i will carry the memory of having worked on the bin laden operation at the cia with me for a long time to come. it was a very special operation.
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i think it did a great deal to try to keep this country safe. the other effort to undermine the leadership of al qaeda are both military and operations working together, and probably the finest example that i have seen in my time of military intelligence operations coming together to go after the enemy who attacked this country. i think we have done a great deal. not only to weaken al qaeda, but to weaken and undermine their ability to attack this country in the future. i am proud of the defense strategy that has been put in place. the defense budget has been reduced by almost a half trillion dollars. but i think it really makes good sense for the country in terms
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of the 21st century. and i hope that ultimately we can make the budget strategy a reality for the future. i am also proud of the opportunities for everyone to serve in the military. for my own background, i have believed believe that everyone deserves a chance to succeed. there are no guarantees. but everyone does deserve a chance to be able to succeed. i am proud of the care that we continue to provide for our wounded warriors and families. they are truly deserving of whatever we can provide because of the sacrifices that they have made. most of all, i remain very proud and honored to have led those very brave warriors as the secretary of defense. they have put their lives on the
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line. they are brave men and women. they have sacrificed in order to keep our country safe. to make the united states the strongest military power in the world. again, let me state that a vigorous and inform the press is vital to our democracy. the department has been including some of the best working on this. we are honored to share a meal or a few drinks with some of you. i have always been impressed by your dedication, fairness, and your work has helped me to do better by the men and women in the military. when i depart this briefing room
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for the last time, know that i deeply thank you for your commitment to informing people about the world regarding the military efforts. and our veterans and military fighting in serving on the frontlines. we all have a common mission. a common mission of keeping our country safe, giving our children a better life. as immigrants coming to this country, a better life. and also in defending freedom by and for all people. without with that, i'm happy to take your questions. >> mr. secretary, i would like to first thank you for answering our questions and i hope that your successor follows in your footsteps. in regards to north korea and their test, one of the questions is are there indications that it
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was a plutonium device or a uranium device were knowing what you know about north korea and the evolution of this program, would you say they are now a nuclear power. what sort of deterrent actions are you considering taking now? >> we obviously are continuing to try to evaluate and assess whether or not the tests they conducted was in fact a nuclear test. we are in the process of doing that. i cannot give you an answer to that question. there is no question that north korea has continued to conduct tests in the past, and i think the combination of their continuing pursuit of not only a nuclear weapon, but the continuing pursuit of developing intercontinental ballistic
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missile capabilities represent, as i said, a real threat to the united states. they continue to be engaged in provocative behavior. they are isolated themselves from the west of the world. russia and china, almost the whole world has condemned what they have done. as a result of that, it should be a great concern to the international community that they are continuing to develop their capabilities to threaten security. not only of south korea, but to the rest of the world. for that reason, i think that we must take steps to make very clear to them that that kind of behavior is unacceptable. >> are there any sort of steps you are contemplating taking? >> i think it is a combination of a number of things that we
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have to do. one is the diplomatic steps that have to be taken. bringing the security conflict together to condemn their actions is very important. to organize the international community to do that. this morning i talked with the defense minister of south korea and we both agreed that we must make sure that we made clear that we are going to continue to conduct exercises and deploy our forces in that area. we are going to continue to show the north koreans that we are fully prepared to deal with any contingencies. we are going to work with both south korea and japan to try to develop the kind of defense systems that we need. and i think that we must do
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everything necessary to increase missile defense with regards to that. >> that you are leaving, you may be able to be more candid. but certainly, as you mentioned, very central to this topic, what can you tell us now that we do not know? [laughter] >> let me ask you a couple of days. did you have a moment at some point -- we thought it would not go as smoothly.
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as you also look back now, who was osama bin laden at the end of it all. was he some lonely joe hardy? was he a threat? who was this guy. >> i think first and foremost, osama bin laden remained inspirational leader. he obviously was not close to the frontlines of al qaeda. but i think for that reason as he communicated with them, he continued to be very dangerous in terms of the leadership he could provide in developing the type of 9/11 attacks -- he remained a dangerous threat to the united states. the operation itself as i said,
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i have basically live that operation and there's no way you can take everything that was done over 10 years, plus the time i was there and try to put it into a movie. it doesn't work that way. what i saw was a very professional intelligence operation that was able to determine the location of his whereabouts. so from the very beginning, it was always very risky.
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because we didn't know that, in fact, it was osama bin laden. we didn't know whether it might be someone else. when we ran into the discussions on the operations to be conducted, there were a lot of different views represented that raised questions and concerns about whether or not we should do this. i remain very confident that with the best information that we have had, it was important for us not to simply ignore what we have, but to take action and determine whether or not it was him.
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you know, what made me confident to proceed with the confidence that i had in those conducting the operation. they do these kinds of operations every night. they do them sometimes 10 or 12 times a night. we have tremendous confidence in their ability to get the job done. i think in the end, that proves true. >> will that get underway before [inaudible] , and do you have the controversial esquire magazine information -- i thought. >> i do not know where that matter stands. i do know that action has been
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considered, but i don't know where those steps are taken. on the magazine article, i have not really read the article that you are raising. but, you know, look, the operations conducted by our special forces are outstanding and involve tremendous risks. yesterday we gave the medal of honor to a sergeant. this kid is out there in the middle of nowhere and is tremendously courageous and brave sitting on his fellow soldiers, but after that kind of bravery and courage go on every
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day in a war zone. and i just think it's difficult everyone who performs in that kind of fashion, but somehow we ought to establish a way to try to assist them. men and women who put their lives on the line to sacrifice for this country. the great thing about this country is that there are a lot of those that are willing to do that and not worry about whether or not they will get an award or additional pay but they do it because they love this country. the. >> why did you recommend that the u.s. provide weapons to the rebel forces in syria.
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the white house turned that down, do you think that this war could go on endlessly? >> well, i was asked a very direct question. again, i gave him a direct answer. i'm not going to go to the the discussions on this issue, and the president made a decision and i supported that. it remains a great concern with what iran is doing in going in there and syria. the al qaeda front is now participating on the opposition
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side. in addition to that, hezbollah seems to be active as well. when you look at the lll. when you look at the lives that have been lost in syria, it's not only a tragic situation, but a situation that can be developed into a much more chaotic situation that can create more turmoil in the middle east. for that reason, i believe that the international community has to take steps to do whatever we can to make sure that bashar al-assad steps down. >> if i could, has general allen general alan talk to you about possibly withdrawing his name? >> you know, john allen, as all of you know, has been an outstanding commander for the united states.
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i think when history looks back on the afghanistan war, the role played by john allen and seeing it as pivotal in terms of the direction he was in command, the direction that was sent by him has put us on the path towards completing the mission. there has been a lot of pressure, a lot of challenges, a lot of work that he has had to engage in, a lot of policy decisions that he has had to work on in terms of the recommendation. john allen came home and had the opportunity to meet yesterday. my recommendation to him was take your time, be with your family, think about what you need to do. you have to make the decision as to what you want to do in the
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future. >> can you talk a little bit about the accomplishments and the things you are proud of. i am wondering if you could focus on any particular disappointment. besides the budget and sequestration. [laughter] [talking over each other] [talking over each other] >> you couldn't resolve or deal with this -- what was a disappointment, in particular. >> you know, i really have to say, and i have expressed this year, i have been honored by having a great team here at the pentagon. general dempsey, all of the service troops have been outstanding. just outstanding. especially in the work that they have done. all of the civilian personnel,
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the secretaries of the staff and others have had a very good team, working on a number of issues. everyone of the tough issues we have had to confront, i have always felt that we have the best advice and guidance and we were able to get things done. to be frank, i have put a lot of burdens on the military, working through a lot of the decisions that we have made. you know, they always responded. he responded in a fashion of dedication to country and dedication to the military. we have been able to do some historic things as a result of that. you know, i guess if there is anything that i am always disappointed by is that all of
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the work that we do here to try to make this country strong and developed a strong defense, i'm sorry about this ,-com,-com ma but i have to say that the partnership with the congress and the ability to have congress of their, to be able to support what is being done to protect this country, i have been very concerned that what should be and what our forefathers envisioned as a strong bond between the legislative and administrative branch to help govern that country, it is not strong as it should be. often times i feel like i don't have a full partnership with my colleagues on the hill, to do
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what's right with this country. you know, i don't pretend that we always make the right decisions. what i look for our members who are willing to work with us, to work our way through some tough issues and be able to find solutions. we need to find solutions. we cannot just sit here and complain. we cannot just sit here and blame others. we cannot point fingers at each other. we cannot try to get soundbites. we cannot figure and try to make political points. we must sell understand the real threats in the world. this is not a time when we can take a deep breath and assume the rest of the world is going to be fine. we are facing real threats as i have pointed out before. we cannot do this alone. we have to do this with the full
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partnership of the congress and both houses of congress. i just have to say that the disappointment i have, in the 50 years i have been in this town, particularly as a member of the congress, i always felt that the leadership in congress and whatever administration was involved here, when it came to the big issues, there was a willingness to work together. frankly one of my great experiences in the congress is being able to work on budget issues with the support of both parties and the support of the leadership. somehow we have to get back to that. we have to get back to this in the state of the country. >> we are having a difficult partnership with congress.
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also, following up, can you explain more? >> well, i think that he, gq, and coming back first and foremost was pleased that the president checked his recommendations with regards to the afghan drawdown. we talked a great deal about the situation there and some of the issues that we have to continue to confront. and i told him when it came to this, in his capacity, i need to do whatever it takes to serve this country. you just have to take them time
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and server family and think about what you wanted or. >> you know, it is kind of in full display. you know, in the congress, the thing that makes it work, you will always have differences. there will always be party differences, political differences, ideological differences, the forefathers fashioning god legislative branch. but there are also some lines that are there. lines that are there that make that process work. lines that involve mutual respect. lines that involve, you know,
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courtesy and a degree of respect for each other. you can kind of see that breaking down in this process. it becomes too personal. it becomes -- you know, people have legitimate point. but there is a way to express it that complements our democracy. and i think what you see on display -- i really do think that they have to get back to a process. there is a world we used to talk about, with the greatest respect, i disagree with my friend. respect not just for the individual but the institution of the congress.
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somehow thmehow thengress. somehow the members need to get back to a point where they really do respect the institution that they are a part of. >> [inaudible question] >> wherever i have gone throughout the world, obviously traveled a great deal and had the opportunity to work with partners everywhere in the world, everywhere i have gone, there is recognition in the united states of america. the united states is a great power in the world. there are values, what we believe in, it is in large measure what gives us the strength that we have for
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leadership in the world that we live in. i think what they worry about is what i worry about. which is whether or not, you know, whether we can govern. whether or not we can face the tough decisions that have to be made and resolve them. and i think the president budget uncertainty is something that other countries are looking at to determine whether or not we can resolve it. that is why when we talk about national security, the greatest concern that i have is the measured uncertainty strong in
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terms of wanting and needing leadership. our ability to work with them and develop capabilities. there's a nervousness about whether, in fact, we can rise to the challenge of governing ourselves and finding answers to the tough issues. >> thank you very much. [applause] >> coming up on c-span2, congressional budget office director douglas elmendorf talks about the potential impact of sequestration budget cuts. then a hearing on the financial problems facing the u.s. postal service. congressional members, the postmaster general testify. on the next "washington journal", the reaction to the
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state of the union address and the recent proposals for job creation. then eliot engel on foreign affairs, a discussion on the national labor relations board, the country's top enforcer of labor laws, plus your e-mails and phone calls and tweaks. live on c-span. >> the senate appropriations committee holds a hearing on thursday on the potential impact of the automatic spending cuts known as sequestration. members will hear from cabinet secretaries from homeland security, hud, education and defense, and the white house budget control. live coverage at 9:30 a.m. eastern on c-span3. >> we have a habit, in this country, if i may say this, but glossing over presents. we decide that some people are bald eagles and they all have to
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be treated as though symbols of the country. what that means is that you have a smoothing over of the rough edges. there is a feeling that they have a right. even if they are gone, the children and their former allies, the lieutenant who live longer than presidents because they are younger, they continue this. in many ways, they are even more ferociously committed to the legacy. they want to show their loyalty. the government is responsible. >> in part two of a conversation, challenges of the nixon president a library and
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museum sunday night at 8:00 p.m. on c-span. >> wednesday, douglas elmendorf said 750,000 jobs will be lost this year if congress does not reach an agreement to avoid automatic spending cuts, also known as the sequestration. the estimate came during a house budget committee hearing. this portion of the committee hearing is one hour 25 minutes. >> thank you, mr. chairman. thank you to all members of the committee. i appreciate the opportunity to be here today and to discuss with you the outlook of the economy over the next 10 years. the country continues to face very large economic budget challenges. let me discuss the economy first, and then i will turn to the budget. economic growth is estimated to
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remain slow this year because of gradual improvement. we see an underlying economic factor that will be offset by a tightening of fiscal policy scheduled under current law. the good news is that the effects of the financial and housing crisis appear to be gradually fading. we expect an upswing in housing construction, rising real estate and stock prices, and increasing availability of credit will help spur this cycle of growth in employment and income and consumer spending and business investment over the next two years. however, several policies that will help to bring down the budget deficit will also represent a drag on economic activities this year. the increase in tax rates above certain thresholds and the cuts in federal spending scheduled to take effect next month, will mean reduced spending by the household and government.
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it will increase by about 1.5% in 2013. but it would increase roughly 1.5% were not for that fiscal tightening. under current law, the unemployment rate was a above 7.5% through for next year. that would make 2014 the sixth consecutive year with unemployment so high. the longest. not since the 1930s. we expect that growth and gdp will pick up after this year to about 3.5% in 2014 and the following four years. the gap between the nation's gdp and what it is capable of producing on a sustained basis, referred to as potential gdp, will still not close quickly.
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the nation has paid a big price for the recession and slow recovery. we estimate that the total loss will be nearly equivalent to half of the total output last year. let me turn to the budget. under current law from the federal budget deficit will shrink and 2013 for the fourth year in a row. an estimated $845 billion, the deficit would be the first in five years below $1 trillion. only about half of what the deficit was in 2009. our projections will continue to fall, totaling nearly $7 trillion over the decade as a
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whole. the expanding economy and schedule changes, 19% compares with this over the past 40 years. at the same time, federal spending will file over the next several years and then rise again. the decline can be traced to discretionary funding and a drop-off in spending that tends to go up. later in the decade, will push up interest payments to the highest share of gdp in 50 years. throughout the decade, the aging of the population, a significant expansion of federal health care programs and rising health care costs per person will push up sitting on the largest programs.
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what does this mean for federal debt? the largest percentage and under current laws, the project but that will be 70% of gdp, higher than the 30% average of the past several years. and it will be on an upward path. it is a significant concern for several reasons. first, i that means the crowding out of this will be greater, there will be a heightened risk of a fiscal crisis in which the government will be unable to borrow at the federal interest federal interest rate could double be even larger current
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laws are modified. for example, the automatic spending cuts set to take effect in march. they prevented the sharp reduction scheduled to occur next january and was scheduled to expire. and it would rise to 27% rather than 77% under current law. third, that could be larger because even the original tasks in the budget control act would reduce such spending to just 5.8% of gdp in 2023. a smaller share, and because the allocation is determined, as you
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know, doing so might be quite difficult. projections covering this report do not reflect long-term budget pressures. because of rising health care costs, a wide gap exists, especially in the form of benefits for older americans. and the tax revenues that have been spent. it is possible only by making substantial cuts relative to current policy and the large benefit program that aids a broad group of people at some point in their life. alternatively it is possible to keep the policies for those
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large programs unchanged. but only by raising taxes substantially for a broad segment of the population. deciding now what combination of policy changes to make in order to resolve the budget would allow for gradual implementation of the changes, which would give households and businesses time to adjust their behavior. thank you. >> thank you. let me talk about this. we had the state of the union address last night. as we all do, we give our play-by-play analysis, what we thought of the speech and one thing stood out to keep me a real cause for concern. it gives me a very big cause for concern. it seems as if the heavy lifting of debt reduction is behind us and we just need to spend a little bit less and we are done. the notion that we already have
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$2.5 trillion, it is not much farther to go to finish the job. this $2.5 trillion of debt reduction does not count the spending that took place during that time. it does not account for the stimulus spending were the first payroll tax holiday for the second payroll tax holiday. it does not account for the 24% increase in nondefense discretionary spending that occurred in the first two years of the administration and the disasters for the hurricane sandy supplemental. it does not account for all of the additional spending. if you wash it out, it is about $500 billion of deficit reduction, not $2.5 trillion. when you hear such projections, which ignore the spending that occurred at the same time, i
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really worry that part of our government here, the senate and the white house, and our friends on the other side of the aisle are deluding themselves and thinking that this is fair. while the other things you think congress will do based upon reasonable assumptions, 87% of gdp. total debt is already 100% of gdp. here is the question that i have. the green is what you said. revenues are historical, about
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18.3%. all of the tax increases, the ones that mr. van horn talked about, much of this has been enacted. it has been enacted as a good portion that the president is calling for. so even if we got every tax increase that the president has called for, we are not even scratching the surface or fixing the problem. the concern that i have is a couple of things. what happens if we don't get this under control. what does a debt crisis look like. what happens to a nation give us
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some different scenarios. what happens if it is faster than your projection. what happens? >> quickly clarifying to point of what you said. we have not yet updated our long-term budget projection. and i presume this slide is on your projection for the coming decade and your extrapolation beyond. it is certainly the case in our long-term out -- outlook, it will continue to rise as a sure of the economy over time. trim and most importantly by the aging of our population and the rising number of eligible beneficiaries and also due to other factors as well. the alternative fiscal scenario is not meant to be a projection of what you and your colleagues will do. as you know, it is a projection of what current policies we
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have. it is an additional benchmark that many of you have found helpful in the past in addition to our standard presentation of what would happen under this current law. >> what is the basic assumption? we have some new things with this. >> are basic productions follow the current law. for example, the tax provisions are scheduled to expire at the end of this year, many that are routinely extended. we presume that they will expire. an alternative, and current law, congress routinely pushes off the cuts and other changes to help the policy on the way continuing to extrapolate the current situation. many members have argued that they would like to do something
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different than the sequester, but leaves in place the original situation in august of 2011. the total debt rises by about $2.5 trillion more over the coming decade than under the current law baseline projections. if debt rises and stay high there are other risks that are created. over time, not under the current economic conditions, but the conditions that we expect a nearly full employment in the economy, at that point in time, not large amount of debt will crowd out private investment that would then raise wages and income. the higher the debt is, the more of that is likely to be crowded out and the greater effect on
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wages and income. we have models to capture that and we report those estimates to you. but there are also risks that are involved. some countries that have had very high levels of debt and have not communicated or persuaded their potential lenders that they have a plan for getting the debt under control have faced a fiscal crisis, which we have defined as government not being able to talk about at affordable rates. treasury interest rates are extraordinarily low. our projection calls for a normalization of interest rates as the economy strengthens and the federal reserves stop pushing so hard to keep interest rates low. we have a normalization of in our basic projections. but there is a greater risk that potential buyers of government
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will get scooped and will be able to not do that at the regular level. over the entire decade, the cost would be about $1.1 trillion higher. if interest rates were lower, the interest would be a rollover. the point is given a large amount of debt the government will have under current law for the coming decade, he can have large effects. >> we are projecting that short-term interest rates rise to about 4% and that longer-term notes price to five and a quarter percent. those rates are adjusted over
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the past several decades, reflecting the effects of the higher level of debt relative to the past decade. >> we are limiting ourselves to about 10 minutes. i will be brief only to say that it seems america is the safe haven. that gives us a privilege. if we do not deal with the core problem, then we would have lost this opportunity that we would have had to get our fiscal house in order. the other problem is growth.
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the best ways to get people back to work with taxes and getting spending under control. when we talk about taxes and tax reform, who pulls are necessary to get tax rates down to help businesses create jobs and get people back to work. if we use loopholes to chase higher spending, they are missing our opportunity for economic growth. i want to make that very clear. with that, i would like to yield to mr. van hollen. >> thank you, mr. chairman. again, welcome. first, just a little bit on the map. as the chairman pointed out.
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we will have $1.5 trillion in cuts as a result of spending cuts, the payroll tax cut, which is probably the biggest single item and given tough economic times, it provided a payroll tax relief. but the point is a big chunk of that number had to do with lost revenue from a payroll tax cut was supported by a great majority in this body. ..
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>> again, the question is how to reduce those deficits? getting back to the sequester is to on negative
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issue could you tell me dr. elmendorf in terms of the negative impact of the sequester what does that translate into lost jobs? >> the estimate is the sequester loan will reduce gdp grows by zero point* six percentage points rethink that would reduce employment by 750,000 jobs. >> 750,000 jobs between now and the end of 2013? that is a lot of jobs obviously we should work overtime to prevent that. if you replace deficit
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reduction with the plan to accomplish the same reduction over tenures he would not have that big of a hit on jobs? >> that's right. >> we also should point* out this cbo, mr. cantor had it right on the floor of the house that if we allow the sequester to take place quebec unemployment would soar quote and set back progress in cited investment sequester would cost 200,000 jobs in the state of virginia alone. that is when we could prevent it for the first two months with a balanced approach should be the model going forward but just to be
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clear because of the defense cuts cuts of non-defense as a result dollar for dollar basis the same amount of jobs are lost? >> with defense and nondefense are similar but with the precise timing with defense spending in non-defense spending brokers but basically you are right to the government pays people to build battleships or equipment and those will have comparable a fax the economy, output and jobs. >> i never understand the logic cutting defense somehow cost jobs but other government spending do not
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obviously if you invest money for roads and bridges you put people to work doing things that are productive for the economy if the scientists around nih those are creance to find cures for diseases would be detrimental to have those cuts and on top of that long-term negative impact with job loss seven of the 50,000 jobs. let me say something this about tax reform what is your estimate. >> last year we had more time and a discussion of tax
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expenditures. we have not updated but to be released a new estimate or are working on one, it is a very large amount of money in many economists agree they are viewed as a form of government spending because they're directed at people comment entities to subsidize activities analogous to the way they subsidize particular activities. it is a large component of spending even though it is recorded as lost revenue. >> is spending to the tax code of sometimes there is
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consensus but that revenue will not come into the treasury to reduce the deficit and the chairman pointed out that tax increase at the high end of the income scale but his goal had $2 trillion in revenue but some symbols said we should do tax reform but a significant amount reduction and to have more than what the president proposed. also speaker boner during those discussions said he did not want $100 billion by closing those tax loopholes
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those are all still there. none of the actions we have taken can eliminate those with all of these candidates talked about so if we agree those are different forms of spending in the tax cut it seems we should be willing to help eliminate those tax expenditures for the purpose of reducing the expenditures in a balanced way and they're not willing to eliminate those expenditures for the purpose that as part of a balanced plan going forward. if you look at the chairman sturt there is no doubt that
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you can pass it changes to laws that have an important impact which is what your budget did last time to squeeze them into the tenure window which is what speaker boehner had to do is not good economics, that is politics. what is the impact on the economy? it high in the middle class and a job. >> balancing the budget is that we may not agree. >> i would like to follow-up we appreciate your insight. is it better to have a balanced budget than not? >> that depends on what your
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values are cbo does not make recommendations about budget policy because the course you choose doesn't just depend on the analysis but your judgment. >> that level of public debt 87% goes under your scenario i suspect you would agree that is not as wise as a level of 76% with a fiscal crisis has a higher propensity? >> it does have a higher cost in the high-risk. >> i concur. to touch on the fiscal cliff with the increase of taxes comedy you recall a spending reduction with that spending
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reduction? >> the cost we produce is relative to current law so that shows a very large cut not the increase you describe. there were only small changes with medicare and cutbacks, a the sequester was deferred to other spending reduction. >> minimal reductions. >> so this balanced approach is balanced and tell it isn't but talk about revenue it has returned to the 2008 levels are higher than the than your average? >> i'm sorry i don't have
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that history. >> that's right the revenue and is higher than the 10 year average with that being the case with $450 billion in the deficit at one point* $3 trillion with revenue returning at the 2008 low close then isn't it true the thing driving the deficit to a greater degree is not that revenues are lower but spending is higher? >> you are right spending is going to sharply. a problem your colleagues face as americans start to retire and benefits they expect individually and there are many more of them then 20 years ago it appears
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of access of benefits they are getting but the aggregate spending goes up that is the challenge they face. >> indeed we look forward to looking through the budgetary process as opposed to lopping off funding for those programs at the expense of the beneficiaries. your alternative fiscal scenario is that a true statement? >> the single biggest difference because congress chose with those tax provisions.
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>> if past is prologue and it is closer at 87%. >> if you your colleagues let policy stand then that is the case. >> when a fiscal crisis occurs, what is the triggering mechanism? with the inability to borrow at the affordable rate? >> but to pay the interest on the dead -- debt. >> that is not a predictable moment in time. >> correct. >> welcome to a new budget
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cycle. this is an important debate have for our country and thank you dr. elmendorf for being here. you did give positive news, we are in a recovery with positive signs of economic growth and you have heard already that it is difficult to reduce the deficit and a fair and balanced way. have seen economic growth to see a contraction for the first time so the debates have any effect and it is not just politics but serious how we grow the economy, strengthen the middle-class in the global
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marketplace and how we meet our obligations to our seniors. we have positive news this week that the private sector institute pointed out we have seen slower growth in the cost of health care private and public sector that is significant with double digit growth and cost , 100 percent increase in the private sector and medicare and medicaid we would see these delivery systems to push the health
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care system with doctors and hospitals to give us better value and improve quality for seniors and in a cost-efficient way. so in particular the demographic problems of 10,000 seniors per day but could you speak to the fact we have seen other reports with very good reduction with a 3% growth rate. i would confirm that as we move the way we pay physicians common change the way we reimburse that would
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require them to pick a model with improved quality to have the potential so we see all moving in that direction as cost savings and containment also the private sector. >> of reemphasize with the baby boom generation. we think by 2023 there'll be roughly 40% more beneficiaries of medicare 40 percent more roughly. that has a tremendous effect on the overall cost of the programs. >> those are seniors? >> there is a market slowing in medicare to pay for
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hospital care party that pays for drugs, medicaid, a private sector they think it is due to the recession and slow growth of income and loss of wealth rethink a significant part it is structural with the crucial is are they transient or injuring? to talk with outside experts the right way to summarize. >> if we pass legislation this year which there has been good and serious discussions does that give you the tools than set the
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direction? >> but the idea we should pay health care providers in a different way than they paid today but there is a shift with the quality of care to keep costs down to lead to a particular outcome is determined. >> good to see you again dr. elmendorf. so with economic growth, job creation and the debt crisis? >> but the solution is a fiscal contraction with a reduction of short-term economic growth for job creation.
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>> so how do we get out? in europe so they waited too long they headed to a contraction in the short period time with extremely high unemployment and a large contraction of gdp? >> other factors as well but the sharp fiscal austerity in europe contributed. >> if we try to fix this or were forced to that would plunge the country into recession. >> yes congressmen. if we ignore it and the deficits go on with the
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alternative scenario then then we risk never getting to our potential growth wear in a few years we have to make that overnight contraction. >> that is a risk absolutely. >> so it makes sense to solve this not too short or not too long of a time. if you feel comfortable answering this is three years to shore, 30 years too long between eight or 12 years is that the approach might be able to do balancing get us out of the pickle for growth? >> and a one to prescribe but you are right to but
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with a high level of debt to gdp and the 2007 debt was 36 percent by the end of this year will raise of 40% if we run at this higher level with this crisis domestically internationally if it is the way it is over the last half a dozen years. >> so with those one your cuts if you replace the sequester with a similar amount of other spending cuts or tax increases, the composition could have something to do with it but
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where that may come from. >> right. the timing is critical, the composition could matter. >> but if we put it off but with tax expenditures, i hate that term is not the vast majority of those of the home mortgage interest, a charitable contribution, and health care to have an impact you have to go into those things? >> yes. we have not quite assessed from us to the single
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largest tax expenditure with the exclusion of health insurance involves tensions in the third largest is interest see. >> thank you. >> thank you for coming before us again i think in response to before how we have increased spending since 2008 and obama raised his hand. we need to roll up our sleeves to find a long-term solution to the data.
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we cannot cut our way out of budget difficulties either. if you look at what has happened in 2009 when there was an increase in spending out of context why was there an increase? was this the government's response with the you vote for it or space it and to a very serious problem in the united states of america with work, health care cost through the roof to have
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private capital invested with 2008 and to provide an atmosphere we want private investment. leander stand a very well. it appears to have a tremendous deficit problem going into 2009 to just cut across the board in view of the social and cultural things going on and much of the world if they think they cut and slash it would be fine. you have created a nemesis, the situation you
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love folks to thank you want to project their tax dollars when you know, very well in 2009 we had tremendous unemployment and if the government didn't do anything, there was no recovery we could point* out chapter and verse and it created jobs now what happened to the last quarter of last year? interesting comparisons. with two major tax cuts we did not pay for this as a prescription drug plan repast eight years ago. there is a reason why we did spend the money but the
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american people did not buy that. they are a lot smarter than they think we are. both sides of the aisle. instead of trickle-down economics over eight years and how many jobs were created then in over the last four years, instead of trickle-down we had trickle up. to wait for the big guys. so to achieve long-term deficit-reduction i

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